Snowflake Inc Earnings - Q1 2026 Analysis & Highlights
Snowflake reported accelerating product revenue growth driven by strong core platform demand and rapid adoption of new AI products (Cortex Code and Snowflake Intelligence), with management raising full-year guidance and emphasizing the company's positioning as an agentic control plane for enterprise AI workloads.
Key Financial Results
Product revenue reached $1.334 billion in Q1 FY2027, with growth accelerating to 34% year-over-year, up from 30% in the prior quarter and 26% a year ago, marking the strongest sequential dollar growth in company history.
Net revenue retention rate increased to 126%.
Non-GAAP operating margin expanded over 300 basis points year-over-year to 12% in Q1.
Added 616 net new customers in Q1, representing a 38% year-over-year increase.
Eight customers surpassed $10 million in trailing 12-month revenue in Q1, bringing the total to 64 customers spending more than $10 million on a trailing 12-month basis.
79 customers now spend more than $1 million on a trailing 12-month basis, with 46 customers crossing the $1 million threshold in Q1 compared to 26 in the year-ago period.
Remaining performance obligations grew 38% year-over-year, compared to 34% in Q1 of the prior year.
Share repurchases totaled approximately $300 million, repurchasing 1.7 million shares, with approximately $800 million remaining of the original $4.5 billion repurchase authorization.
Cash, cash equivalents, short-term and long-term investments totaled $4.4 billion at quarter end.
Business Segment Results
AI products, including Cortex Code and Snowflake Intelligence, are seeing the fastest adoption of any new products in company history and are contributing meaningfully to revenue.
Accounts using Snowflake Intelligence more than doubled quarter-over-quarter.
CoCo is already in use with more than 7,100 accounts, giving builders a natural language way to create applications, pipelines, agents, and workflows directly in Snowflake.
AI serves as a catalyst for the core data platform business, with customers moving to the cloud and to Snowflake with increasing urgency.
Growth benefited from a meaningful increase in AI revenue and an acceleration in the core data platform business.
The number of use cases deployed in the quarter increased 114% year-over-year as customers moved more workloads into production on the platform.
The number of use cases won per account executive increased 86% year-over-year, underscoring both growing customer demand and improved sales execution.
Capital Allocation
Repurchased 1.7 million shares for approximately $300 million during Q1.
Approximately $800 million remains of the original $4.5 billion share repurchase authorization.
Entered into a five-year, $6 billion contract with AWS, more than doubling the prior contract signed in FY 2023.
Announced an intended acquisition of Natoma, which will bring 20 employees to Snowflake and extend the agentic control plane beyond data and development workflows into everyday applications.
Added 190 employees in Q1, compared to approximately 400 added in the year-ago period, with 173 joining through the Observe acquisition and only 17 from organic hiring.
Industry Trends and Dynamics
AI is fundamentally reshaping how work gets done, with organizations moving toward a future where employees and intelligent agents work side by side to accelerate decisions, automate complex workflows, and unlock new levels of productivity and innovation.
Organizations are increasingly moving toward becoming agentic enterprises, requiring a unified governed data foundation, access to leading AI models, connectivity across enterprise applications and workflows, and a unifying agentic control plane.
Customers are migrating workloads to Snowflake faster in order to access the data, context, and governance needed to power AI securely and at scale.
Customers are embracing a governed conversational way for business users to ask questions, get answers, and act on enterprise data.
There is a massive backlog of what customers want to do, and helping them do it faster enables them to get to the next set of work sooner.
Competitive Landscape
Snowflake's value proposition centers on customer choice and independence from cloud provider mechanics, with implementations working on AWS and Azure.
Snowflake has similar, really good partnerships with leading AI labs, both Anthropic and OpenAI, collaborating closely to create great and safe AI products.
Cortex Code and Snowflake Intelligence provide model choice, running on multiple models and hosting a series of other models, with commitment to act on behalf of what is right for the customer.
Snowflake's deep infrastructure capabilities in role-based access control, replication, disaster recovery, and governance take significant time to develop and provide competitive advantages.
Customers have already configured Snowflake to have trusted access to data, and AI amplifies this advantage while alternatives would require customers to reinvent the wheel and rebuild governance infrastructure.
Snowflake achieved the most net new customer adds in company history, with achievement across all geographies and all industry verticals.
Macroeconomic Environment
No specific macroeconomic headwinds or tailwinds were discussed in the earnings call.
Growth Opportunities and Strategies
Snowflake is positioned to lead in the next phase of enterprise AI by sitting at the center of customers' data, business context, AI models, and workflows.
The agentic control plane represents a new market opportunity, where intent becomes action grounded in customer enterprise data, business context, models, applications, and security policies.
Snowflake Intelligence and Cortex Code allow customers to move from insight to action and from prompt to production within Snowflake's trusted governance model.
CoCo is contributing meaningful AI revenue while also driving increased engagement across the broader platform.
The Natoma acquisition extends the agentic control plane beyond data and development workflows into everyday applications, enabling users to send emails, summarize Slack conversations, check calendars, and open Jira tickets without leaving Snowflake Intelligence or CoCo.
Actions through Natoma happen from a governed environment with enterprise security, permissions, observability, and policy enforcement built in, extending Snowflake's leadership in AI governance.
Snowflake is using AI internally to revolutionize how teams work, with CoCo driving over 25% faster case resolution times and 25% increase in case throughput per engineer in support operations.
Engineering teams using CoCo have freed up capacity and moved resources to product innovation while reducing complex case resolution time by nearly 30% and cutting engineering time spent per ticket by roughly 40%.
CoCo has doubled developer productivity as measured by pull requests and lines of code per engineer and has automated more than 100 workflows across finance, marketing, sales, and HR in just weeks.
Snowflake delivered over 20% more product capabilities to market in Q1 than a year ago, underscoring the pace of innovation and breadth of platform expansion.
New Chief Revenue Officer Jonathan Beaulier is positioning Snowflake to scale in the AI era, bringing more than a decade of experience with Snowflake and deep knowledge of customers and platform.
Expanded collaboration with AWS through a new $6 billion multiyear agreement to accelerate enterprise AI adoption globally, leveraging Graviton compute and AI services.
Snowflake surpassed $7 billion in lifetime AWS Marketplace sales, reflecting growing demand for AI and data workloads running on Snowflake.
Expanding $200 million partnership with OpenAI was announced during the quarter.
Joint capabilities from landmark partnership with SAP were brought to general availability, enabling customers to unite mission-critical business data across core data systems within the AI Data Cloud.
Financial Guidance and Outlook
FY 2027 product revenue guidance raised to $5.84 billion, representing 31% year-over-year growth, up from prior guidance of 27% growth.
Q2 product revenue expected between $1.415 billion and $1.42 billion, representing 30% year-over-year growth.
Non-GAAP product gross margin expected at 75% for FY 2027.
Q2 non-GAAP operating margin expected at 12.5%, with full-year non-GAAP operating margin guidance increased from 12.5% to 13.5%.
Non-GAAP adjusted free cash flow margin guidance reiterated at 23% for the full year.
Full-year outlook includes approximately 150 basis point headwind related to the Observe acquisition, unchanged from last quarter.
Observe acquisition contributed less than 1 percentage point of product revenue growth in Q1 and is expected to add approximately 1 percentage point of revenue growth for the full year.
Customers continue to favor Q4 renewals, with bookings expected to be increasingly weighted towards the fourth quarter.
CoCo was the largest driver of the increased forecast, with the company layering in observed behavior from the quarter throughout the remainder of the year.
Acceleration in the core business also informed the outlook.
AI Product Adoption and Monetization
Snowflake Intelligence and Cortex Code are the two primary ways customers experience the agentic control plane opportunity, one for business users and one for builders.
Customers adopting CoCo are growing even faster, with momentum expected to continue as adoption expands.
Adoption of AI products is increasing core platform consumption as customers move from questions to answers, from prompts to pipelines, and from ideas to production workflows on Snowflake.
CoCo can outperform frontier models when it comes to operations within Snowflake, with benchmarks published demonstrating this capability.
CoCo has been expanded to support other data platforms like Amazon Glue, Airflow, dbt Cloud, and even Databricks.
CoCo has demystified agent creation, enabling even non-technical users to go from a dataset to creating agents and running evaluations.
AI products have lower gross margin than the core platform, but the company is offsetting this through lower bandwidth costs from the AWS contract and maintaining 75% product gross margin.
Cost governance mechanisms are being implemented including cost limits at account level, agent level, and per-user token restrictions, with exceptions for high-value users.
Smaller models from providers like Mistral are being used for simpler tasks to improve efficiency, with capabilities being built natively into Snowflake.
Customer Expansion and Use Cases
Large customers are expanding their use of Snowflake across multiple use cases and workloads, including migrations, analytics, and AI-powered applications.
Holiday Inn Club Vacations chose Snowflake to power their data and AI modernization, citing simplicity, built-in AI and machine learning capabilities, and strong partnership.
Houzz selected Snowflake to accelerate their next phase of growth, enabling faster access to insights and improving data processing performance.
One of the largest banks in the United States completed a complex Teradata migration onto Snowflake after nearly two years, representing one of many legacy platforms they intend to move to Snowflake.
Nestlé is expanding use of Snowflake to power enterprise digital transformation, building enterprise data products used by over 50,000 users across 150 global capabilities.
A major wealth management firm built a Cortex-powered agent called AskYourData, with over 60% of business inquiries previously routed to analysts now answered instantly on demand.
42% of Snowflake customers are data sharing on Snowflake with at least one stable edge, underscoring the power of the platform to connect organizations around a single governed source of truth.
